2014-08-06  

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Check CAP Entitlement Clauses in Farm Tenancies

The Tenant Farmers Association urges all English farm tenants and particularly those with Farm Business Tenancies ending this year, to check their agreements for clauses which might affect their ability to hold onto entitlements for CAP support payments.

TFA Chief Executive George Dunn said “DEFRA made the right decision to allow existing Single Payment Scheme entitlements to form the basis for creation of the new Basic Payment Scheme entitlements at the beginning of next year. However, in various ways, landlords have attempted to use contracts of tenancy to snatch entitlements away from tenants for little or no compensation at the end of those agreements”.

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“Having looked carefully at a large number of agreements which purport to be able to allow the landlord to take entitlements, there are many where the clauses simply do not work and tenants are able to retain their entitlements. However, sadly we have also seen clauses which do provide landlords with the ability to remove entitlements from tenants. Each tenancy agreement must be looked at individually,” said Mr Dunn.

Concerned to ensure fairness as between landlords and tenants, the Tenancy Reform Industry Group, made up of farming, land owning and professional bodies, in 2004 drew up guidance as best practice in drafting contracts of tenancy. Specifically it said:

  • There are good reasons for parties to a current or prospective contract to be fair in their dealings, both in their interests and in the wider interests of the landlord and tenant sector. In this respect, it would be unfair if the individual to whom entitlement had been allocated were required by a clause in the agreement to give it up for little or no consideration in comparison to its value.

  • At the end of the tenancy, the tenant should be able either to retain control of the entitlement allocated to him for use against other land or pass it to his landlord or a nominee for fair compensation.
  • “Even in cases where contractual clauses allow a landlord to acquire the entitlements we would ask all landlords to abide by this best practice. However, tenants should be aware that this is not legally binding,” said Mr Dunn.

    The TFA has been disappointed that despite this cross industry guidance some landlords, including The Crown Estate, have insisted on enforcing unfair clauses to remove entitlements from tenants for no compensation.

    “It is very sad that a landlord such as The Crown Estate is using its dominant position to enforce a clause which the cross industry guidance states clearly is unfair,” said Mr Dunn.

    TFA

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